Events

Sears Canada to continue special monthly pension contributions

Sears Canada Inc., Toronto, agreed to continue special monthly contributions to the Sears Registered Retirement Plan until Sept. 30, the company announced in a news release Friday.

The agreement was the result of negotiations among Sears Canada representatives, current and former employees, and debtor-in-possession lenders, among others, and comes one week after the company sought court permission to halt the contributions as part of its bankruptcy restructuring, a Sears Canada spokesman said in an email.

Further clarity on the potential outcome of Sears Canada's restructuring efforts under the Companies' Creditors Arrangement Act is expected by Sept. 30.

The special contributions, which amount to about C$3.7 million ($2.8 million) per month, are intended to help fill the company's pension fund deficit.

The pension fund had C$1.2 billion in assets as of the plan's last valuation date, Dec. 31, 2015. The plan was 78% funded under solvency, or immediate termination, funding rules but 102% funded under ongoing operation rules, both as of the last valuation date.

In court documents, Sears Canada said the requirements of receiving C$450 million in debtor-in-possession financing forced the company to "comply with a budget, which does not provide" for the benefit contributions.

Had the special contributions been suspended, pension benefits would have still been paid in full because the assets are held by custodian CIBC Mellon and not subject to claims by the company's creditors, the spokesman said.